Nevada casinos seek tax refunds on comped meals

CARSON CITY, Nev. >> Nevada casinos are pressing the state Department of Taxation to
halt the collection of more than $200 million in back sales taxes due on
past complimentary meals given to casino patrons and employees until
various legal issues are decided.

The issue surfaced at a public
hearing last week in Carson City held by taxation department officials,
the Las Vegas Sun reported.

The department said earlier this year
it would begin imposing a sales tax on comped meals as of Feb. 15 and
assess a 25 percent penalty as well as 9 percent annual interest on all
taxes not paid by July 31.

The agency, however, is still trying to adopt regulations on how to collect the sales tax.

Attorney
Josh Hicks, who represents casinos and retail interests, noted
litigation over the sales tax on complimentary meals has been going on
for a long time.

He said Boyd Gaming already has appealed one
Nevada Tax Commission decision concerning the issue, and Harrah's is
likely to appeal another. The tax commission has denied Boyd Gaming a
refund of $21 million and Caesars Entertainment a refund of $31 million.

Hicks
urged the department to delay any decision until the Nevada Supreme
Court rules on the matter. The case is still pending in district court.

But
department officials say they'll move forward with processing the
regulations on how to collect the sales tax, and the issue will then be
up to the tax commission.

The department said earlier this year it
would begin imposing a sales tax on comped meals as of Feb. 15 and
assess a 25 percent penalty as well as 9 percent annual interest on all
taxes not paid by July 31. But the regulations are needed before that
can happen.

The tax commission, at a June 25 meeting, is expected
to consider the regulations and whether the statute of limitations
applies to some of the back taxes.

The issue has dragged on for
years and has huge consequences for state coffers and casino companies
in particular, as well as other businesses such as restaurants and
taverns that provide meals to employees.

In 2008, the Nevada
Supreme Court, in a ruling favoring John Ascuaga's Nugget in Sparks,
struck down imposing a use tax on free meals but left unresolved the
question of whether such meals are subject to sales tax.

Since then, casinos around the state have petitioned for refunds of those use taxes totaling hundreds of millions of dollars.